IT bigwigs, startups spar over software patents

Startups say innovation is often incremental and programs are built on top of other programs, and that excessive licensing could create a roadblock to this.

ET Bureau

Updated: May 09, 2016, 12:37 IST

NEW DELHI: Battle lines are drawn in the technology industry over software patents as the bigwigs and startups spar over allowing patenting of software. At a government-organised meeting this week, a war of words erupted between India’s services-focused traditional IT industry and product software startups, both of whom have concerns about the rules.

While startups said allowing any kind of patents would force litigation and licence costs on them, the IT industry and multinational technology companies argued that the current law that doesn’t allow for patenting of software is leading to a loss of intellectual property and investments from the country.

At the heart of the face-off is a set of guidelines that the Patent Office introduced in August 2015 for computer-related inventions (CRI), and eventually rolled back in February this year after a huge backlash from startups and product software companies. The guidelines suggested that if a software has novelty, is inventive or tangible, and has proper technical effect or industrial application, it can be patented.

The industry is divided over the matter, and at the meeting on Wednesday, facilitated by the Department of Electronics and Information Technology, stakeholders from industry, academia and law, and policymakers got together to present their cases.

While the startups agreed with the guidelines in their current form — these allow bootstrapped innovators to use the software in their products without paying for it — the IT industry raised concerns about their intellectual property not being protected in India.

Startups say innovation is often incremental and programs are built on top of other programs, and that excessive licensing could create a roadblock to this.

“Patents are a state granted monopoly and should be granted with extreme care. The example of countries like the US is that patents in software lead to a lot of litigation, and hurt the smaller companies,” said Venkatesh Hariharan, director (FinTech) at iSPIRT, a software product think tank.

Take the example of Srikant Sreenivasan, cofounder of cloud services company FissionCloud who was involved in a patent infringement litigation with a big US-based corporation that bought one of his earlier companies.

“It led to the deal being pushed back by over a year and half as we had to re-write major portions of the software to stay compliant and steer clear of patents in that space,” he told ET.

He said while the initial intent of patents was to foster innovation, it is much abused today by dominant companies to stifle innovation.

“It is essential to persist with the guidelines in the current form so that software developers and startups can innovate freely in India. Such an environment is important for the success of the Make in India and Digital India initiatives of the Government of India,” said Prasanth Sugathan, counsel at the Software Freedom Law Centre, who was present at the meeting.

However, the Indian IT industry and multinationals are asking the government to modify the provisions under CRI guidelines of granting a software patent only if accompanied by novel hardware.

“Increasingly, there is a blurring of distinction between software and hardware. For example, embedded software and its functionality can have a bearing on the hardware design and in many cases it can make an already existing hardware function in a novel manner,” said Bishakha Bhattacharya, senior director at IT industry body National Association for Software and Services Companies (Nasscom). Areas like Internet of Things, where a combination of hardware and software together will usher in inventions, will not necessarily require novel hardware, she added.

Tata Consultancy Services, Wipro and Infosys, which were also present at the meeting, didn’t reply to emails seeking comment.

The Confederation of Indian Industry, which includes Indian and multinational technology companies as members, argued that the guidelines in their current form could lead to a loss of IP to the country. “Some Indian companies have put in large investments into developing IP in software, which is used in different type of hardware. If the country does not provide protection for them, their inventions can be infringed upon and they are forces to apply for patents outside the country,” said R Saha, adviser, intellectual property rights, CII.